Elixinol Global (ASX:EXL) quarterly update, November 2020

Interviews

by Rachael Jones

Elixinol Global Limited (ASX:EXL) CEO Oliver Horn provides an update on the company's September quarter results, discussing sales in keys markets, early success with UK and Irish pharmacy agreements and continued improvement from Hemp Food Australia.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Elixinol Global (ASX:EXL) is CEO Oliver Horn. Oliver, welcome back to FNN.

Oliver Horn: Thanks, Rachael. Great to be back.

Rachael Jones: Good to see you again. Now, you've just released your September quarter update. What were the highlights there?

Oliver Horn: We delivered 18 per cent quarter on quarter growth for the quarter. Outstanding result. But, very importantly, we also reduced our operating cash outflow to 3.5 million from over 6 million in the previous quarter. So, significant cost savings, revenue up across all the regions. Every single region has been growing. And that is despite a very challenging environment. So, we're really excited about the quarter.

Rachael Jones: And what can you tell me about how things are going in Europe at the moment?

Oliver Horn: Europe has been a beautiful success story for us. We went into Boots Ireland with our new skincare range. Well Pharmacy, third-biggest pharmacy chain in the UK, with eight products on shelf in over 500 pharmacies. And as a result of that, particularly the August and September months when we launched those products have been just phenomenal for us and contributed to that 60 per cent growth profile in Europe. And excitingly, Europe, it's only the beginning. We only just made those massive distribution gains. And so we're now looking forward to actually working with our customers and launching our consumer marketing campaigns in this all-decisive fourth quarter, Christmas quarter, to capitalise on the new distribution that we found in Europe. So, exciting times in Europe. Really, really exciting.

Rachael Jones: That sounds great. Now, looking back home, what can you tell me about Hemp Foods Australia?

Oliver Horn: Hemp Foods Australia. Yeah, it's just so beautifully positioned. It's one of the strongest hemp foods brands in Australia. It's number one, two, three, when you Google search hemp foods in Australia. And had another fantastic performance, been growing robustly for the last three quarters really now, and getting more and more profitable in the process. And having significant growth upsides because we’ve got new innovation coming out. We've got new product launches coming out. And very excitedly, actually, we are just starting to service Costco as well. And the first orders are going out now in October.

Rachael Jones: Excellent. Thanks, Oliver. Now your online sales have been performing very well after the rebranding and investment into your website. Are major shopping platforms like Kogan and Amazon being considered?

Oliver Horn: Yes, absolutely. Look, we're in active discussions in the UK with Amazon. They've been trialling CBD and we are in very advanced discussions on partnering with Amazon. And then in the US, which is obviously our stronghold, we're talking to a number of retail online platforms. But Amazon is still restricted there. They're not selling CBD products just yet. But there are smaller online retailers that we work with. And we actually have an online affiliate program with over 150 affiliates who run online platforms and selling our products on their site. So, it's a very extensive program that we're running.

Rachael Jones: And Oliver, could you remind us briefly about the company's turnaround strategy and when you expect to be cashflow positive?

Oliver Horn: Yeah, look, the turnaround strategy is really based on three key initiatives. One is driving revenue hard and taking costs out, which we've demonstrated really well. The second one is focusing on margin accretion, really getting to a high 50, 60 per cent margin, and we're achieving that too. Really focusing on high margin consumer channels, in particular in e-commerce. And the third part of our turnaround story is the rebranding of our product range, new innovation that we're having, and then supporting it with new capability in our team. And all those three together are really for us marking now the turnaround, the sustainable turnaround. We're not giving a forecast as to when we're expecting profitability, but we are now on a growth trajectory. And it's a matter of time. So it's not if, it's when it's going to happen.

Rachael Jones: So to the last question now, Oliver. What's the outlook for the December quarter and the Christmas shopping period?

Oliver Horn: The outlook is very, very positive for us. We just have the all new distribution gains in Europe, which are coming on board. We're having a fantastic Christmas campaign with our retailers in Europe. And then we're gearing up to Black Friday and Cyber Monday in the US, where we have a huge marketing spend earmarked to drive sales online, in particular, in our high margin channels. And very excitedly, we are also launching a new product range of gummies. So I'm announcing it here for the first time. We haven't really talked to the market about that. That's literally hitting shelves on 2nd November already. So look, there's so much going on in our business. We reset the business. We have momentum, we have a new product range. We have innovation coming out, new distribution. Q4 for us is something that we are really cherishing.

Rachael Jones: It's very exciting times. Oliver Horn, thanks for the update and congratulations on another strong quarter.

Oliver Horn: Thank you, Rachael. As always, it's good to be here, and see you next time.


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